Can Jacinda Ardern walk the tightrope between the US and China?

There's a fine line between our “Five Eyes” friends and an increasingly assertive China.

China celebrated 40 years of “reform and opening” last month, four decades after leader Deng Xiaoping started the people’s republic on the path that turned it into the economic giant that it is today.

I recently went to a special exhibition in the national museum next to Tiananmen Square, where the government is celebrating that economic transformation. And the transformation is indeed astonishing.

In 1978, the annual income per head in China was $334. Today, it’s $12,909. The country is the largest market in the world for luxury goods and is becoming globally competitive in high-tech industries such as robotics, space and artificial intelligence (AI). It was striking to see at the exhibition how much of it was devoted to the future, rather than the past. It screamed of ambition.

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No company exemplifies China’s rise and its ambitions better than Huawei Technologies. Former Chinese People’s Liberation Army engineer Ren Zhengfei founded Huawei in 1987 with three workers and about $7000 and now it’s a global brand, operating in 170 countries and employing more than 180,000 people. It makes everything from smartphones (it’s the world’s second-biggest manufacturer, behind Samsung and ahead of Apple) to networking equipment.

Yet Huawei has also come to symbolise the potentially nefarious side of China’s rise. Four members of the “Five Eyes” intelligence-sharing network – the US, UK, Australia and New Zealand – have moved to block Huawei hardware from their 5G networks, concerned that it might be connected to China’s security apparatus. The remaining member, Canada, is thought to be reconsidering its decision not to block it.

The suspicions stem from Zhengfei’s 20 years’ service in the Red Army, and also from the fact that the company is closely intertwined with the state. As one analyst in Beijing told me, you don’t get to be that big without being in cahoots with the state.

More cause for concern has come following the arrest in Canada of Meng Wanzhou, the Huawei founder’s daughter and the company’s chief financial officer. She’s wanted in the US on fraud charges.

China has had a diplomatic temper tantrum, warning of severe consequences if she’s not completely freed. Some Chinese companies have warned employees they’ll be fined, or even fired, if they have an iPhone rather than a Huawei.

After the detention of this corporate princess, Beijing has detained two Canadian men who’d been doing NGO work in China for years. Both now face serious charges of endangering national security. It’s hard to believe these weren’t acts of reprisal. Canadians are rethinking their travel and their business plans as a result.

Canada is caught between the US and China and their trade war, but it is standing its ground, saying it will stick to its laws. But for the men and their families, this must hurt.

These incidents encapsulate the dilemmas for plenty of other countries, including New Zealand, of dealing with China. The good parts are great – shipping huge amounts of dairy products to customers who can’t get enough of them – but the bad parts are alarming.

And if the exhibition, with its plans for space and AI and military technology, is anything to go by, they’re only going to get more so. China may soon be testing the principles of many other countries, too, starting by pressuring them to use Huawei technology.

Jacinda Ardern, when she eventually comes to Beijing, will find herself having to walk a diplomatic tight-rope.

This article was first published in the January 5, 2019 issue of the New Zealand Listener.